RIGHT OF THE SELLER TO DISPOSE THE GOODS

A RESEARCH PROJECT SUBMITTED IN FULLFIILLMENT OF THE COURSE

CONTRACT LAW-2 FOR THE REQUIREMENT OF THE DEGREE B.A. LL.B (HONS.)
FOR THE ACADEMIC SESSION 2019-2020.

SEPTEMBER, 2019
CHANAKYA NATIONAL LAW UNIVERSITY, PATNA
800001

SUBMITTED BY:
SAURABH KUMAR
B.A LL.B (HONS.), 3rd SEMESTER
ROLL: 1971

SUBMITTED TO:
DR. VIJAY KUMAR VIMAL
ASST. PROFESSOR OF CONTRACT LAW
 TABLE OF CONTENTS

TABLE OF CONTENTS ...........................................................................................2

DECLARATION BY THE CANDIDATE ...................................................................3
ACKNOWLEDGEMENT ...........................................................................................4
1. INTRODUCTION ................................................................................................5
2. TRANSFER OF PROPERTY IN UNASCERTAINED AND FUTURE GOODS: .......6
3. RESERVATION OF RIGHT OF DISPOSAL ........................................................9
3.1. OPEN DELIVERY OF CONSIGNMENTS.-..................................................... 10
3.2. PARTIAL DELIVERY OF CONSIGNMENTS.- ........................................... 10
3.3. LIEN FOR FREIGHT OR ANY OTHER SUM DUE.- ................................... 10
3.4. UNCLAIMED CONSIGNMENT.- ................................................................ 11
3.5. ASSESSMENT OF DAMAGES BY CONSIGNEE.- .................................... 12
3.6. DISPOSAL FOR UNCLAIMED GOODS – RULES AS TO.- ......................... 12
4. RETENTION OF TITLE UNDER SALE OF GOODS ACT 1979 ........................ 13
4.1 WHAT DOES RETENTION OF TITLE DO? ...................................................... 14
4.2. KEY ELEMENTS OF A RETENTION OF TITLE ARRANGEMENT ........... 14
5. CASES .......................................................................................................... 15
6. CONCLUSION ................................................................................................ 17
BIBLIOGRAPHY .................................................................................................. 18

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 DECLARATION BY THE CANDIDATE

I, hereby, declare that the work reported in the B.A L.L.B (Hons.) Project Report titled “Rights
of the Seller to Dispose the Goods” submitted at Chanakya National Law University, Patna is
an authentic record of my work carried out under the supervision of Dr. Vijay Kumar Vimal. I
have not submitted this work elsewhere for any degree and diploma. I am fully responsible for
the contents of my Project Report.

(Signature of the candidate)

Saurabh Kumar
Roll: 1971
B.A L.L.B (Hons.), 2nd year
3rd Semester

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 ACKNOWLEDGEMENT

I would like to sincerely thank Dr. Vijay Kumar Vimal, faculty of for and guiding me
throughout the project. Through this research project I have learned a lot about the aforesaid
topic and this in turn has helped me grow as a student. I also thank my friends and all those
unseen hands that helped out at every stage of my project.

Thank You

Saurabh Kumar

3rd Semester
CNLU, PATNA

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 1. INTRODUCTION

In every contract of sale, a seller is under an obligation to deliver the goods sold and buyer is
under an obligation to pay the requisite amount set or quid pro quo i.e. something in return,
under the contract of sale, by them. This is known as reciprocal promise as per Section 2(f) of
the Indian Contract Act. In other words, any set of promises made which forms the
consideration or part of the consideration for each other are called reciprocal promises and
every contract of sale of goods consists of reciprocal promises.

In certain cases, when a buyer refuses or fails to pay the requisite amount to the seller, the seller
becomes an unpaid seller and can exercise certain rights against the buyer. These rights are
considered as seller’s remedies in case there is a breach of contract by the buyer. These
remedies can be against:

1. Buyer
2. Goods

According to Section 45(1) of Sale of Goods Act, 1930, the seller is considered as an unpaid
seller when:

a- When the whole price has not been paid and the seller has an immediate right of action for
the price.

b- When Bills of Exchange or other negotiable instrument has been received as conditional
payment, and the pre-requisite condition has not been fulfilled by reason of the dishonour of
the instrument or otherwise. For instance, X sold some goods to Y for $50 and received a
cheque. On presentment, the cheque was dishonoured by the bank. X is an unpaid seller.

Seller also includes a person who is in a position of a seller i.e. agent, consignor who had
himself paid or is responsible for the price.

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 2. TRANSFER OF PROPERTY IN UNASCERTAINED AND FUTURE
GOODS:

The general principles concerning transfer of ownership of unascertained and future goods are
described under sections 18 and 25. These sections provide that where goods contracted to be
sold are not ascertained or where they are future goods, the property in goods does not pass to
the buyer unless and until the goods are ascertained or unconditionally appropriated to the
contract so as to bring them in a deliverable state, either by the seller with the assent of the
buyer or by the buyer with the assent of the seller. Such assent may be expressed or implied,
and may be given either before or after the appropriation is made. It must be kept in mind that
this rule30 is fundamental in nature and it applies irrespective of what the parties intended until
goods are ascertained or appropriated there is merely as curtained “agreement to sell”. Sale of
ten tons of paddy from a granary, has not the effect of transferring property to buyer (It is an
agreement to sell only) until ten tons are appropriated to the contract by the seller and the buyer
knows it. The process of ascertainment or appropriation consists in earmarking or setting apart
goods as subject-matter of the contract. It involves separating, weighing, measuring, counting
or similar acts done in relation to goods with an intention to identify and determine the specific
goods to be delivered under the contract. The distinction between „ascertainment‟ and
“appropriation” is that whereas “ascertainment” can be a unilateral act of the seller, that is, he
alone may set apart the goods, “appropriation” involves the element of mutual consent of the
seller and the buyer.

Essentials of valid appropriation1:

As regard a valid or proper appropriation of goods, the following point should be noted:

(i) The appropriation must be of goods answering the contract description, both as to
quality and quantity.
(ii) The appropriation must be intentional, i.e., it must be made with intention to
appropriate goods to specific contract, and it must not be due to mere accident or
mistake.

1
Section 24, Sale Of Goods Act, 1930

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(iii) The appropriation must be made either by the seller with the assent of the buyer or by
the buyer with the assent of the seller. Assent of the other future party is thus necessary;
whether before or after the appropriation is made for a valid appropriation.
(iv) The appropriation must be unconditional, i.e. the seller should not reserve to himself
the right of disposal of the goods until and unless certain conditions are fulfilled.

Illustration No.1 A agrees to purchase 10 tons of petrol from B and already sends the steel
tins to B for packing the petrol. As soon as B will fill the petrol in the steel tins sent to him by
the buyer, the property shall be transferred from B to A because the consent of the buyer to the
appropriation made by the seller shall be taken to have been given by the buyer himself
supplying the steel tins (consent of buyer before appropriation).

Illustration No. 2 A of Madras orders certain goods from B a manufacturer of Calcutta. After
the goods are ready, B appropriates the goods to the contract informing A that the goods are
ready for delivery upon which A requests B to send them by Rail to Madras after affecting the
Insurance thereon. The property in the goods shall pass from B to A as soon as the goods after
being insured, are handed over to the Railway Authorities (consent of the buyer after
appropriation).

Illustration No. 3 A sells 500 maunds of rice out of bigger quantity to B and the rice is packed
in seller’s gunny bags and the words “wait orders of the buyer” are pasted on the gunny bags
with the address of the buyer, it was decided that the property has not changed hands although
the goods are in a deliverable state because the buyer’s consent to the appropriation has not yet
been obtained.

Method of Appropriation: Appropriation of goods for the purpose of the contract may be made:

(a) By packing the goods in suitable containers.

(b) By separating the goods from a larger quantity.

(c) By the delivery of the goods to a common carrier or bailee for the purpose of transmission
to the buyer without reserving the right of disposal which has been defined by Section 25 of
the Sale of Goods Act as follows:

1. Where there is a contract for the sale of specific goods or unascertained goods which are
unconditionally appropriated to the contract, the seller may under the terms of the contract or

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appropriation lay down certain conditions to be fulfilled by the buyer. In such a case although
goods may be delivered to the common carrier or other Bailee for the purpose of transmission
to the buyer the property shall not be transferred to the buyer.

Illustration: A sells 500 bales of cotton to B on the condition that certain bills of exchange
which have been drawn by B on A and which are still in circulation should be withdrawn by
the buyer. The delivery of the bales was to be given in instalments. The buyer fails to withdraw
the bills of exchange and the seller stopped the delivery of instalments claiming the price of
the bales already delivered, it was decided that no transfer property has taken place even in the
bales which have been delivered because the buyer has not fulfilled a condition laid down in
the contract.

2. Where the seller sends the goods and takes a bill of lading or railway receipt, deliverable to
himself or his order it is presumed that the seller has reserved the right of disposal over the
goods.

3. Where the seller sends the goods and draws upon the buyer for the price, sending to him the
bill of lading of the railway receipt along with a bill of exchange to be either accepted or paid
by the buyer, the buyer shall not acquire the ownership of the goods till he has accepted or paid
the bill of exchange and if by mistake he acquires the bill of lading without accepting or paying
the bill of exchange, the property does not pass to him.

Illustration: A sells goods to B. He weights the goods at his own place of business, sends them
to B’s placed, taking the railway receipt and sending the same to his bander at B’s place of
business instructing him to surrender the R/R to the buyer B only when he pays the Bill of
exchange. The banker surrenders the receipt to the buyer B upon his acceptance of the bill.
Later on B refuses to honour the goods. A files a suit for the recovery of the price. Held that A
has no right to recover the price because the property in the goods has not passed to B, it being
contingent upon the payment and not the acceptance of the bill.

Delivery to Carrier:

When a seller delivers the goods to a carrier or other Bailee for the purpose of transmission
to the buyer and does not reserve the right of disposal, the property passes on to the buyer at
once. As soon as goods are loaded and railway receipt obtained and the same is sent to buyer
direct the ownership is passed on delivery of goods to Railway Company. If the railway receipt
is sent to banker with instructions to deliver the same on payment, the right of disposal is said

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to be reserved and the property will not pass to buyer at the time of delivery of goods to railway
co.

The delivery to the carrier may be:

(i) Absolutely for the buyer: Where the bill of lading or railway receipt is made out in the
name of the buyer and is sent to him, the presumption is that no right of disposal has
been reserved by the seller in respect of those goods. The ownership in such a case
passes from the seller to the buyer.
(ii) Absolutely for the seller: Where the bill of lading or railway receipt is taken in the
seller’s or his agent’s name and is sent to the agent of the seller to be delivered to the
buyer on the fulfilment of certain conditions, the seller is deemed to have reserved the
right of disposal of the goods. In such a case the ownership does not pass to the buyer
until the necessary conditions are fulfilled and the documents of title are delivered to
the buyer.

3. RESERVATION OF RIGHT OF DISPOSAL

Reservation of the right of disposal means reserving a right to dispose of the goods until certain
conditions (like payment of the price) are fulfilled. When the seller reserves such a right the
property in the goods does not pass until those conditions are fulfilled. The seller may reserve
such a right expressly while making a contract or while making appropriation of unascertained
goods. He may also reserve this right by implication, for example, when the seller while
transporting goods takes the railway receipt or the bill of lading in his own name or where the
seller has taken the R/R or B/L in the name of the buyer but has delivered the same to his bank
with the instructions that the document is to be delivered to the buyer only when he makes
payment of the price or accepts the bill of exchange, the right of disposal is said to be reserved
impliedly. 2

Lost of lien:

As already observed, lien depends on physical possession of goods. Once the possession is lost,
the lien is also lost. It is provided that the unpaid seller of goods loses his lien thereon in the
following cases3:

2
Section 25, Sale Of Goods Act, 1930.
3
Section 67, Sale Of Goods Act, 1930

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(a) When he delivers the goods to a carrier or other Bailee for the purpose of transmission to
the buyer without reserving the right of disposal of the goods; or

(b) When the seller expressly or his agent lawfully obtains possession of the goods; or

(c) When the seller expressly or impliedly waives his right of lien.

An implied waiver takes place when the seller grants fresh term of credit or allows the buyer
to accept a bill of exchange payable at a future date or assents to a sub-sale which the buyer
may have made. It may be noted that right of lien, if once lost, will not revive if the buyer
redelivers the goods to the seller for any particular purpose.

3.1. OPEN DELIVERY OF CONSIGNMENTS.-

Where the consignment arrives in a damaged conditions or shows signs of having been
tampered with add the consignee or the endorsee demands open delivery, the railway
administration shall give open delivery in such a manner as prescribed.4

3.2. PARTIAL DELIVERY OF CONSIGNMENTS.-

(1) The consignee or endorsee shall, as soon as the consignment or part thereof, is ready
for delivery, take delivery of such consignment or part thereof notwithstanding that
such consignment or part thereof is damaged.
(2) In the case of partial delivery under sub-section (1) the railway administration shall
furnish a partial delivery certificate, in such form as may be prescribed.
(3) If the consignee or endorsee refuses to take delivery under sub-section (1), the
consignment or part thereof shall be subject to wharfage charges beyond the time
allowed.5

3.3. LIEN FOR FREIGHT OR ANY OTHER SUM DUE.-

(1) If the consigner, the consignee, or the endorsee fails to pay on demand any freight, or
other charges due from him in respect of any consignment, the railway administration
may detain such consignment or part thereof or, if such consignment is delivered, it

4
See Railways Act, 1989, Section 81.
5
See Railways Act, 1989, Section 82.

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 may detain any other consignment of such person which is in, or thereafter comes
into its possession.

(2) The railway administration may, if the consignment detained under sub-section (1) is-

(a) Perishable in nature , sell at once; or

(b) Not perishable in nature, sell by public auction, such consignment or part thereof,
as may be necessary to realise a sum equal to the freight or other charges:

Provided that, where a railway administration for reasons to be recorded in the is

of the opinion that it is not expedient to hold the auction, such consignment or
part thereof may be sold in such manner as may be prescribed.

(3) The railway administration shall give a notice of not less than seven days of the public
auction under clause (b) of sub-section (2) in one or more local newspapers or where
there are no such newspapers in such manner as may be prescribed.

(4) The railway administration may, out of the sale proceeds received under sub-section
(2), retain a sum equal to the freight and other charges including expenses for the sale
due to it and the surplus of such proceeds and the part of the consignment, if any, shall
be rendered to the person entitled thereto.6

3.4. UNCLAIMED CONSIGNMENT.-

(1) If any person fails to take delivery of-

(a) Any consignment; or

(b) The consignment released from detention made under sub-section (2) of section
83.
Such consignment shall be treated as unclaimed.
(2) The railway administration may-

(a) In case of an unclaimed consignment which is perishable in nature, cause a notice to

be served upon the consignee if his name and address are known, and upon the

6
See Railways Act, 1989, Section 83.

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 consignor if the name and address of the consignee are not known, requiring him to
remove the goods within: period of seven days from the receipt thereto and if such
notice cannot be served or there is a failure to comply with the requisition in the
notice, sell such consignment in the manner provided in clause (b) of sub-section (2)
of section 83.

(3) The railway administration shall, out of the sale-proceeds received under sub-section
(2), retain a sum equal to the freight and other charges including expenses for the sale
due to it and the surplus, if any, of such sale proceeds shall be rendered to the person
entitled thereto.7

3.5. ASSESSMENT OF DAMAGES BY CONSIGNEE.-

There is no provision in the Railways Act or the Rules authorising the consignee to claim
open delivery or assessment of damages before delivering of the goods.8

In U.O.I v. Gyani Ram9, Manbhardayal & Co. v. U.O.I10, U.O.I v. Jutharam11, U.O.I. v.
Hukumchand12, it has been held that the consignor/ consignee cannot claim open delivery or
assessment of damage before delivery as of right. If the consignee does not take delivery of
goods alleged to have been damaged in transit or before delivery is given, he does so at his
own risk and the railway administration would be justified in disposing of the goods by public
auction, after due notice to the consignee in accordance with the provisions of section 56(1),
of Railways Act.

3.6. DISPOSAL FOR UNCLAIMED GOODS – RULES AS TO.-

If a railway company sells perishable goods by the public auction after trying to find out the
address of the consignor and the consignee and also waiting for some time to see if anybody
turned up to take delivery of them, it is protected under section 56, of the Railway Act.13

The law relating to perishable goods is that where perishable goods are sent by Railway, the
railway company are agents to carry, not to sell. To give them the right to sell, circumstances

7
See Railways Act, 1989, Section 84.
8
Union of India Vs. Ram Prasad, AIR 1982 Raj 253 at 254 : 1982 WLN 88: 1982 Raj LW 215 : 1982 Raj LR 533.
9
AIR 1967 Pat 32.
10
AIR 1967 Pat 412.
11
AIR 1968 Pat 35.
12
AIR 1970 MP 55.
13
Jugeshwar Mahton v. M & S.M. Ry., ILR 26 Pat 516 : AIR 1940 Pat 378.

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must exist, which put them in the position of agents of necessity for the owner to take that
action which is necessary in the interests of the owner. These conditions do not arise if the
carrier can communicate with the owner, and get his instructions. They must give the owner
opportunity of deciding how he will deal with the goods. Therefore, to justify a sale by a
railway company they must first show that it was commercially impossible to communicate
with the owner and receive instructions from him. If they show that, they must then show
that a sale was in the circumstances the only reasonable business course to be taken. In a suit
for damages against Railways on the ground that the Railways ought to have obtained
plaintiff’s instructions as to disposal of goods prior to sale, the defence was that the Railway
lines were submerged under floods and the train service was suspended for about 10 days;
therefore, the goods being perishable had to be sold along with other articles in a lot in
emergency: Held, that the notice to owner of goods was essential before selling the
consignment and in absence of the proof that it was commercially impossible for the
Railways to communicate with the consigner or the consigner, the plaintiff’s case was bound
to succeed.14

4. RETENTION OF TITLE UNDER SALE OF GOODS ACT 1979

Under the Sale of Goods Act 1979 (SGA 1979), property in specific or ascertained goods
passes to the buyer when the contracting parties intend it to pass15 and a seller can, as a term
of the contract, reserve the right of disposal16. The seller may also reserve the right of disposal
of the goods after their delivery to the buyer until certain conditions are met.
A ROT (Retention of Title) clause in a contract is evidence that the parties did not intend
property in the goods to pass to the buyer prior to full payment, even though the goods have
been delivered to the buyer or to a carrier or custodian for the buyer.

14
Union Of India v. Satyanand Rout, 1962 (4) Ori JD 284 : AIR 1963 Ori 17.
15
Section 17, Sale of Goods Act, 1979.
16
Section 19, Sale of Goods Act, 1979.

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4.1 WHAT DOES RETENTION OF TITLE DO?
Under a simple ROT clause, the seller retains title to the goods until the buyer pays the price
of the goods. The buyer is not granting security over the goods and no charge is created.
Legal and beneficial title should be reserved to the seller.

A valid ROT clause gives the seller of the goods priority over secured and unsecured
creditors of the buyer if the buyer fails to pay for the goods because it is insolvent or because
of other reasons specified in the clause. For more information on priority between competing
creditors.
The clause should give the seller the right to recover the goods from the buyer. As title to the
goods will not have passed to the buyer, once the seller regains possession of the goods, the
seller will have the right to sell the goods to another buyer.

4.2. KEY ELEMENTS OF A RETENTION OF TITLE ARRANGEMENT

A ROT (Retention Of Title) clause must:

1. be incorporated into the contract for sale

2. provide that the seller retains legal and beneficial title to the goods until full payment
has been received
3. give the seller the right to enter the buyer's premises to recover the goods
4. oblige the buyer to store the goods separately from those belonging to the buyer or third
parties
5. oblige the buyer to mark the goods as belonging to the seller
6. prohibit the buyer from fixing the goods to property without the seller's written consent
7. enable the seller to check that goods are appropriately marked and stored, and
8. specify the trigger events enabling the seller to enforce the ROT clause.

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 5. CASES

The Supreme Court in Commissioner of Income Tax, Madras V. Mysore Chromite Ltd.17 In
the instant case, the Supreme Court observed that the requirement of Sec. 23 of the Sale of
Goods Act, 1930, is not only that there shall be appropriation of the goods to the contract, but
that such appropriation must be made unconditionally. In this case an assesse company carrying
on its business in India shipped the goods to American and European buyers outside India
under bill of lading issued in its own name. Under the contract it was not obliged to part with
the bill of lading until the bill of exchange drawn by it on the buyer's Bank in London where
the irrevocable letter of credit was opened. Upon the terms of the contract in this case, and the
course of dealings between the parties the property in the goods could not have passed to the
buyers earlier than the date when the bill of exchange was accepted by the buyer's Bank. This
always took place in London. It was held that at the earliest the property in the goods passed in
London, where the bill of lading was handed over to the buyers Bank against the acceptance of
the relative bill of exchange and that the sales took place outside British India and ex-
hypothesize the profits derived from such sales arose outside British - India. The Supreme
Court said this is further elaborated by Sec.25 of the Act, which provides that "where there is
a contract for sale of specific goods or where goods are subsequently appropriated to the
contract, the seller may, by the terms of contract or appropriation, reserve the right of disposal
of the goods until certain conditions are fulfilled. In such a case notwithstanding the delivery
of goods to the buyer, or to a carrier or other Bailee for the purpose of transmission to the
buyer, the property in the goods does not pass to the buyer until the conditions imposed by the
seller are fulfilled.
In Pyshpapriya Devi V. Stat e of Maharashtra,18 the plaintiff- appellant entered into a contract
with the second defendant - respondent, his brother for cutting of trees in a particular forest.
Rs. 15000/- were to be paid on the date of contract and balance within six months. Clause 5 of
the contract provided that “the contractor will not remove any forest produced from the site....
And until the logs are checked and passed by the Estate Forest Staff.19 The second defendant -
respondent, having been affected by the M.P. Abolition of Proprietary Rights Act, 1950, got
an order of stay from the Supreme Court against the State on 27th March, 1951. However later
his petition was dismissed and the stay order was vacated. The government there upon did not
permit the plaintiff - appellant to remove the already cut trees, unless he paid Rs. 35000/- to it.
The plaintiff- appellant so paid this amount and removed the cut trees. He then sought to
recover this amount with interest from, the government on the ground that he had already paid
this amount to his brother, the second defendant- respondent. The Supreme Court stressed the
following two points:-
(i) The contract was clearly not for sale of goods, but for transfer of right in property.
(ii) If cut trees (if there were any) were in the nature of unascertained goods, and the
property therein would pass only as under Sec.23 of the Sale of Goods Act.20

17
A.I.R. 1955, S,C. 98.
18
A.I.R. 1978, S.C. 1076
19
Id. at 1079.
20
Id. at 1080.

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 It is clear from different decisions given by the Supreme Court that the passing of property
in unascertained or future goods, the elements which are necessary are as following:
(i) Appropriation of the goods made by one party with the consent of others and the
goods appropriated to the contract are of the same description as given in the
contract and in a deliverable state and,
The appropriation is unconditional. Section 23(2) gives an example of unconditional
appropriation. "Where, in pursuance of the contract, the seller delivers the goods to the
buyer or to a carrier or other Bailee (whether named by the buyer or not) for the purpose
of transmission to the buyer, and does not reserve the right of disposal, he is deemed to
have unconditionally appropriated the goods to the contract.”

In Commissioner of Income Tax Delhi V. M/3 P.M. 31 Rathod and Co.21, the assesse were a
firm of manufacturers of perfumery and hair oils at Ratlam and their goods were sold
throughout India. The goods were sent to the customers either by V.P.P. (value prepaid) or by
rail. In the instant case assesse sent their Bank Drafts received from buyer (or Post Office) for
being cashed and credited to their account at Bombay. The sole question for determination was
where the income, profits were and gains received or were deemed to receive. The Supreme
Court said the Post Office was not the agent of the buyer. Under the V.P.P. system the post
office became an agent of the seller for the recovery of price and delivered the goods it was
liable in damages to the sellers. Under the V.P.P. system the seller retained control over the
goods right up to the time the goods were delivered to the buyer against payment of price and
therefore, the contract would fall under Sec25 of the Act. The property in the goods passed at
the place where the price which included profits v/as paid.
Sub clause (1 ) of Sec.25 provides that where there is a contract for sale of specific goods, or
where goods are subsequently appropriated to the contract, the seller may by terms of the
contract or appropriation reserve the right of disposal of the goods until certain conditions are
fulfilled and if he does so, the legal consequence mentioned in the section flows, namely, that
in such a case notwithstanding the delivery of goods to a buyer or to a carrier or Bailee for
transmission to the buyer, the property in the goods does not pass to the buyer, until the
conditions imposed by the seller are fulfilled.22
In General Papers Ltd. V. P. Mohideen & Bros.23, the bales of paper were sent to a buyer by
railway. The railway receipt was to be collected by him from a bank on payment. He paid and
received the documents. But before that the goods were destroyed by fire. The loss fell upon
the seller.

21
A.I.R. 1959, S.C. 1394.
22
Consolidated Coffee Ltd. V. Coffee Board, Bangalore, A.I.R. 1980, S.C. 1468 at 1495.
23
AIR 1958, Mad 482.

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 6. CONCLUSION

The purpose of reserving the right of disposal of the goods is to ensure that the price is paid
before the property passes to the purchaser. In the Prepaid Value system, for example, the buyer
is owned until the seller retains control of the products when the price is paid against the
delivery. In a contract to sell specific goods or where the goods are subsequently appropriated
for the contract. The seller can, until certain conditions are met, reserve the right to dispose of
the goods. The purchaser may not acquire ownership of the goods until conditions imposed by
a seller are fulfilled, even if the goods are delivered either to the purchaser itself or to any
carrier or other bailees for transmission to the purchaser.

For example, X sends certain goods by lorry to Y and instructs the lorry driver not to deliver
the goods until Y pays the lorry driver the price.

When the price is paid. The seller is presumed to have reserved the right of disposal under the
following circumstances:

By taking a title document in his own name or his agent’s name [Section 25(2)]. The seller is
presumed to have reserved the right of disposal when goods are shipped or delivered for
carriage to railways but the seller takes the title document, i.e. the lading bill (in the case of
carriage by sea) or the railway receipts (in the case of carriage by rail) in his own name or on
behalf of his agent. Only when the buyer pays the price in exchange for a lading bill or receipt
from the railway, the property passes over to the buyer.

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 BIBLIOGRAPHY

BOOKS:
 R. Chakraborty, “Law of Sale Of Goods And Partnership”, (2nd edn., 2019, Orient
Publishing Company).
 Avtar Singh, “Law of Sale of Goods”, (8th edn., 2018, EBC publications).
 Nilima Chandiramani, “Law of Sale of Goods and Partnership”, (1st edn., 2000, Shroff
Publishers & Distributors Pvt. Limited).

ENACTMENTS:

 Sale Of Goods Act, 1930.

 Railways Act, 1989.
 Sale Of Goods Act, 1979.

WEBSITES:

 https://blog.ipleaders.in/right-of-lien/
 https://sol.du.ac.in/mod/book/view.php?id=645&chapterid=393
 https://blog.ipleaders.in/transfer-of-ownership/
 https://www.advocatekhoj.com/library/bareacts/saleofgoods/25.php?Title=Sale%20of
%20Goods%20Act,%201930&STitle=Reservation%20of%20right%20of%20disposal
 https://www.coursehero.com/file/p2mnm2c/Reservation-of-right-of-disposal-
Reservation-of-the-right-of-disposal-means/

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